States Rejecting Medicaid Expansion Face Fallout

medicaid expansion
Danny Johnston/APArkansas House Majority Leader Rep. Bruce Westerman signals his intention to speak against a Medicaid funding bill in the House chamber at the Arkansas state Capitol in Little Rock, Ark.

WASHINGTON -- Rejecting the Medicaid expansion in the federal health care law could have unexpected consequences for states where Republican lawmakers remain steadfastly opposed to what they scorn as "Obamacare."

It could mean exposing businesses to Internal Revenue Service penalties and leaving low-income citizens unable to afford coverage even as legal immigrants get financial aid for their premiums. For the poorest people, it could virtually guarantee that they will remain uninsured and dependent on the emergency room at local hospitals that already face federal cutbacks.

Concern about such consequences helped forge a deal in Arkansas last week. The Republican-controlled Legislature endorsed a plan by Democratic Gov. Mike Beebe to accept additional Medicaid money under the federal law, but to use the new dollars to buy private insurance for eligible residents.

One of the main arguments for the private option was that it would help businesses avoid tax penalties.

The Obama administration hasn't signed off on the Arkansas deal, and it's unclear how many other states will use it as a model. But it reflects a pragmatic streak in American politics that's still the exception in the polarized health care debate.

"The biggest lesson out of Arkansas is not so much the exact structure of what they are doing," said Alan Weil, executive director of the nonpartisan National Academy for State Health Policy. "Part of it is just a message of creativity, that they can look at it and say, 'How can we do this in a way that works for us?'"

About half the nearly 30 million uninsured people expected to gain coverage under President Barack Obama's health care overhaul would do so through Medicaid. Its expansion would cover low-income people making up to 138 percent of the federal poverty level, about $15,860 for an individual.

Middle-class people who don't have coverage at their jobs will be able to purchase private insurance in new state markets, helped by new federal tax credits. The big push to sign up the uninsured starts this fall, and coverage takes effect Jan. 1.

As originally written, the Affordable Care Act required states to accept the Medicaid expansion as a condition of staying in the program. Last summer's Supreme Court decision gave each state the right to decide. While that pleased many governors, it also created complications by opening the door to unintended consequences.

So far, 20 mostly blue states, plus the District of Columbia, have accepted the expansion.

Thirteen GOP-led states have declined. They say Medicaid already is too costly, and they don't trust Washington to keep its promise of generous funding for the expansion, which mainly helps low-income adults with no children at home.

The remaining states are still weighing options. Concerns about the unintended consequences could make the most difference in those states.

A look at some potential side effects:

The Employer Glitch

States that don't expand Medicaid leave more businesses exposed to tax penalties, according to a recent study by Brian Haile, Jackson Hewitt's senior vice president for tax policy. He estimates the fines could top $1 billion a year in states refusing.

Under the law, employers with 50 or more workers that don't offer coverage face penalties if just one of their workers gets subsidized private insurance through the new state markets. But employers generally do not face fines under the law for workers who enroll in Medicaid.

In states that don't expand Medicaid, some low-income workers who would otherwise have been eligible have a fallback option. They can instead get subsidized private insurance in the law's new markets. But that would trigger a penalty for their employer.

"It highlights how complicated the Affordable Care Act is," said Haile. "We wanted to make sure the business community understood."

The Immigrant Quirk

Arizona Gov. Jan Brewer, a Republican, called attention this year to this politically awkward problem when she proposed that her state accept the Medicaid expansion.

Under the health law, U.S. citizens below the poverty line -- $11,490 for an individual, $23,550 for a family of four -- can only get coverage through the Medicaid expansion. But lawfully present immigrants who are also below the poverty level are eligible for subsidized private insurance.

Congress wrote the legislation that way to avoid the controversy associated with trying to change previous laws that require legal immigrants to wait five years before they can qualify for Medicaid. Instead of dragging immigration politics into the health care debate, lawmakers devised a detour.

Before the Supreme Court ruling, it was a legislative patch.

Now it could turn into an issue in states with lots of immigrants, such as Texas and Florida. It could create the perception that citizens are being disadvantaged versus immigrants.

The Fairness Argument

Under the law, U.S. citizens below the poverty line can only get taxpayer-subsidized coverage by going into Medicaid. But other low-income people making just enough to put them over the poverty line can get subsidized private insurance through the new state markets.

An individual making $11,700 a year would be able to get a policy. But someone making $300 less would be out of luck, dependent on charity care at the emergency room.

"Americans have very strong feelings about fairness," said Weil. "The notion of 'Gee, that's just not fair' is definitely a factor in the discussion."

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I'm disabled/retired, and WELL below the poverty level. I think that if each government entity: Federal, State, County and City would form a whole department which does nothing but find and punish all the millions of people who are defrauding the government, i.e. you and me. Yes, civil servants are supposed to be conscientious enough to be "whistle blowers" and to make an effort to weed out all the fraud in the government. Why then why are so many people abusing the system? Because they can. Every day I see or hear of someone using disability and food stamps to buy drugs. What about all the people having all the children just so they can get increased benefits. How much of it do you think the children see?

But, it will never happen, because the governments have become so big and inefficient that it would take too much effort - and money, to support a "welfare police" department.

April 23 2013 at 1:08 AM Report abuse rate up rate down Reply

Obamacare is like a Spider's web, it keeps getting larger and keeps intangling all that come near. The Affordable Care Act is not affordable as unfortunately everyone, and I do mean everyone will find out. Healthcare will not be free to anyone under Obamacare as one will pay one way or another. This Health Care Bill is loaded with fines and fees where employers as well employees won't be able to use it or afford it for long. The Democrats did not do anyone a favor by pushing this Health Care Law through Congress Without Reading All that was in it. What the Democrats have done is unforgiveable as that is the true Greed, the Greed of Power.

April 23 2013 at 12:25 AM Report abuse +1 rate up rate down Reply

The Republicans believe greed is good. They believe all people other than themselves are slaves to be pushed down and used for profit. The stupid thing is clear it is called REPUBLICAN GREED. It is like riding down the road on a horse and pulling out a gun and shooting the horse. THEY ARE SO STUPID they havn't figured out it is important to keep the horse / slave healthy and working for them.


Oh how totally wrong you are dear. There is nothing more greedy then a democrat darling. Remember that you heard this straight from the horses mouth doll. It is unfortunate that you wander through life in a state of confusion. How sad for you.

April 22 2013 at 10:18 PM Report abuse +3 rate up rate down Reply
1 reply to mrspelosi's comment
Ah Shucks

I really can't believe you being of color can be that stupid to believe the comment you made.

April 22 2013 at 11:33 PM Report abuse -2 rate up rate down Reply

The writer of the "News Article" assumes that Government Handouts are a Free Lunch. They aren't: surprised??? States which embrace the Medicare Expansion get a ( totally unfunded ) promised subsidy of Hundreds of Billions of Dollars for Four (4) Years for providing Government Health Care to a minimum of 40 million additional recipients and then in 2019 they are obligated to continue to pay for these Mega Expensive Programs WITHOUT any more Federal Dollars ( which didn't exist to begin with!). The whole Article is economically illiterate and ignores the most basic funding and show me the money questions much less answers! Unfortunately, Leftist propaganda substitutes for Journalism in today's Media world: at least until we ALL go broke!

April 22 2013 at 9:28 PM Report abuse -1 rate up rate down Reply

Now it could turn into an issue in states with lots of immigrants, such as Texas and Florida. It could create the perception that citizens are being disadvantaged versus immigrants.

No Perception-reality. The citizens ARE at a disadvantage compared ti immigrants-as the law is written.

April 22 2013 at 5:30 PM Report abuse +7 rate up rate down Reply
1 reply to paddleman1928's comment

You speak the truth. Thank you!

April 22 2013 at 10:56 PM Report abuse rate up rate down Reply

II am disable and depend on medcaid for meds.I would never be able to buy afford health care.It worries me a great deal that thay would just pull the rug from benerth my feet. I was born a U.S. ciitzern ,my father served in the Navy for 22 yrs.

April 22 2013 at 4:19 PM Report abuse +2 rate up rate down Reply

Wait until those that pay for their insurance see their new premiums with all the "free" stuff starting in January. Article talks about penalties for large corporations, what this slanted article leaves out is that these penalties are much cheaper than providing insurance to employees and will improve the companies bottom lines and maybe even earn bonuses for the company executives for increased profits. Wonder how many companies with just over 50 employees will be reducing below this threshold and thus unemployment will go up.

April 22 2013 at 4:18 PM Report abuse +5 rate up rate down Reply
1 reply to chuckw452's comment
Bill Barbour

They will just change over to ALL part time employee's. That way they don't have to give any benefits at all of any kind.

April 22 2013 at 11:14 PM Report abuse rate up rate down Reply

Add a Comment
When we stop giving unlawful immigrants and immigrant that came to our country in last 60 years and not have done 1 hour of work or been employed, we give them Medicaid,Medicare, Food Stamps, Plan 8, and to top it all the get a Check ,all these benifits for not working but wanting the American Dream, I ask you then why do we have to pay for our benifits, and ask the rich to pay more taxes.
I am retired and I can ot even make on my Social Security check, I have co-payment every time I have a test.
When the goverment take all the unlawful Immigrants take all the free benifits, metion above we will be albe to support or at least feed our children and ediley a little better life, instead of makeing their benifets being cut.
I am sure also we would have some money to pay some of the 16Trillions we owe.
I do not think this is fair for people that have worked and came to this Country the right way. many generations later, they have no rights to enjoy their retirement, and lay-off.

April 22 2013 at 4:17 PM Report abuse +6 rate up rate down Reply
2 replies to yrs1942's comment

Name one state that provides Medicaid, Medicare or food stamps to illegal immigrants. That's right - you can't because it's illegal. No state provides these benefits to an illegal. The only way an illegal obtains food stamps is through the underground market, certainly not through any state governmental agency. Try a little experiment and call your state social services office and tell them that you’re an illegal immigrant desiring Medicaid and food stamps and see what they tell you.

April 22 2013 at 7:33 PM Report abuse +2 rate up rate down Reply
1 reply to BillA88205's comment

Name one state that provides Medicaid, Medicare or food stamps to illegal immigrants. That's right - you can't because it's illegal.

What??This is a circular argument, totally askew! That's like saying illegal immigrants can't be here because they are illegal! But they're here, more and more and more and more all the time. So just because something is illegal does NOT mean it doesn't happen! Illegal aliens DO get Medicaid, food stamps, etc., and drain funds from the US for other LEGAL uses for LEGAL US citizens!

April 22 2013 at 11:02 PM Report abuse rate up rate down

By coming to America "the right way" do you mean like those two terrorists who killed 3 and injured 170+ in Boston should get benefits because they had a visa and later became citizens? I'll take my chances with those who cross the border illegally and work like dogs for a few bucks an hour.

April 22 2013 at 7:54 PM Report abuse -2 rate up rate down Reply

Notice how the unemployment rates are higher as more people sneak in the country. The Americans are forced out of the workforce an replaced by aliens like the movie Invasion of the Body Snatchers

April 22 2013 at 3:51 PM Report abuse +6 rate up rate down Reply
2 replies to Iselin007's comment

Good one!

April 22 2013 at 11:04 PM Report abuse rate up rate down Reply

No, no, the body snatchers are in Congress. They look alien to me. LOL

April 23 2013 at 12:46 AM Report abuse -1 rate up rate down Reply

Eliminate all foreign aid and put this money toward helping Americans - health care and everything else. We owe the rest of the world absolutely NOTHING.

April 22 2013 at 3:50 PM Report abuse +9 rate up rate down Reply